One by one, the signs point to the decline and perhaps demise of the mobile handset subsidy. Whether it’s Vodafone paying newfound attention to the high-end pay-as-you-go market or regulators threatening to let contract customers walk out in the event of a price hike, there are frequent signs that carriers won’t be subsidizing the smartphones they sell you forever.
In the U.S., this is a new thing. It was only in December that T-Mobile USA announced its abandonment of smartphone subsidies, much to the interest of other players such as Verizon, but in Western Europe things have moved on quite a bit further. In fact, according to new research from Informa Telecoms & Media, almost 30 operators there have already dropped handset subsidies for some or most customers.
What’s taking the place of those subsidies? Leasing and financing plans, such as Vodafone’s Red Hot and O2 Germany’s My Handy schemes. According to Informa analyst Francesco Radicati, this makes it easier for operators to cope with the growing popularity of expensive smartphones:
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